77-Year-Old Insurance Agent Pleads Guilty To Conning Customers Out Of $8.2M

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A Pennsylvania insurance agent could spend more than five years in prison after pleading guilty for his part in a scheme that swindled millions of dollars from customers.

Federal prosecutors accused 77-year-old John Hogan of running a 14 year-long promissory note scheme that bilked more than $8.2 million from clients.

According to an indictment [PDF] filed in the federal court of Western District of Pennsylvania, from 2002 to 2016, Hogan persuaded clients of his business— Hogan & Associates — to borrow against the cash value of their insurance policies so that he could provide loans to individuals in need of capital.

Hogan, who claimed to be a financial advisor but was not licensed, told his clients that borrowing against or “cashing out” these insurance policies was a better investment than simply borrowing from a bank or investing their money.

In order to persuade clients to lend the funds, Hogan claimed that these “client-investors” would receive at least a 10% return.

To participate in Hogan’s investment opportunity, clients were asked to send him checks of less than $10,000.

To give the scheme an air of authenticity, Hogan would prepare promissory notes that contained the subheading “John F. Hogan-Financial Coordinators.” The notes promised to pay the principal sum of money to the investor by a certain date typically one or two years in the future.

When the note came due, Hogan would persuade the lenders to “roll over” the investment for additional years. Meaning he did not have to repay the balance.

The indictment claims that Hogan never actually had borrowers and instead used the money to prop up 25 homes and investment properties he owned, his business, and to provide interest payments to clients he had previously persuaded to lend money.

The Associated Press reports that in one case, a client provided Hogan with $1.7 million by sending 249 checks to the agent. While the woman received a few interest payments, none of the original loans were repaid, according to assistant U.S. attorney George Melucci.